Letting spouse in on home loan

[thetom]

I currently own our ppor and would like to now split the loan and house with my spouse.

before i bug my broker with any questions i thought i would annoy people here first for information.

Im guessing that i will need to refinance and pay some government transfer fees, solicitor fees and get the loan approved for the spouse hey presto. Is there any need to pay stamp duty again? i hope not.

Thanks for any help
Tom

 

[tgan]

I currently own our ppor and would like to now split the loan and house with my spouse.

before i bug my broker with any questions i thought i would annoy people here first for information.

Im guessing that i will need to refinance and pay some government transfer fees, solicitor fees and get the loan approved for the spouse hey presto. Is there any need to pay stamp duty again? i hope not.

Thanks for any help
Tom

I only have one question....Why?

 

[thetom]

we have reached that part in our relationship haha

and if anything happened she could get half anyway, why not share the financial burden.

 

[thetom]

I found this

Particular residences (transfer of interest in property to spouse)
We will not charge duty on a transfer or agreement to transfer an interest in residential land if all of the following conditions are met:

the transfer is by way of gift (regardless of whether an existing mortgage is assumed by the other party)
the transfer is from one party of a subsisting marriage, de facto relationship (where the partners have lived and are living together on a genuine domestic basis for 2 years or more, regardless of gender) or registered relationship to the other party of the marriage, de facto relationship or registered relationship
after the transfer, the residential land will be owned by the parties as joint tenants, or tenants in common in equal shares
the residence will be the principal residence of the parties.
See section 151 of the Duties Act 2001 (the Act) for more information. A statutory declaration (PDF 25 K) must be completed when claiming this exemption.

does this mean no stamp duty to transfer, then set up the loan structure after both names are on the title?

 

[Rolf Latham]

dont bother..............


I mean that very seriously

Work out what your combined financial goals are and get some advice on borrowing, structure etc

doing what you are contemplating may hold BOTH of you back from your higher financial "good" so do the homework and understand the implications.

ta
arolf

 

[Terry_w]

I found this

Particular residences (transfer of interest in property to spouse)
We will not charge duty on a transfer or agreement to transfer an interest in residential land if all of the following conditions are met:

the transfer is by way of gift (regardless of whether an existing mortgage is assumed by the other party)
the transfer is from one party of a subsisting marriage, de facto relationship (where the partners have lived and are living together on a genuine domestic basis for 2 years or more, regardless of gender) or registered relationship to the other party of the marriage, de facto relationship or registered relationship
after the transfer, the residential land will be owned by the parties as joint tenants, or tenants in common in equal shares
the residence will be the principal residence of the parties.
See section 151 of the Duties Act 2001 (the Act) for more information. A statutory declaration (PDF 25 K) must be completed when claiming this exemption.

does this mean no stamp duty to transfer, then set up the loan structure after both names are on the title?

You will need to convey the title from you name to both names. This can be done by using a conveyancer, but you should use a lawyer to work through the legal implications. stamp duty would probably be exempt.

the lender has a mortgage s you owould have to get their permission first = loan approval.

There are also serious implications in terms of tax (if house would ever become an investment), asset protection, estate planning, land tax etc etc.

In terms of future borrowings, you may want to consider keeping things as is. Less risk - perhaps. But many things to consider.

 

[Aaron_C]

Keep it separate unless you have no choice.

 

[thetom]

It would not be very viable to have this house as an IP as i didn't set the loan up correctly in the first place.

We have just gone halves in an IP and it would be better for our ability to save for deposits if we halved the loan on the PPOR. We like to keep all finances halved in the event that something happens it is a lot easier to work out.

My plan was to split the original price of the property in two (my half that is half paid off, and her half which would be half of the full price).

I understand that we would still be liable in a borrowing sense for the full amount but by splitting the loan we would be able to pay down our non depreciable loan quicker.

What would be the reasons not to go down this path?

 

[Terry_w]

It would not be very viable to have this house as an IP as i didn't set the loan up correctly in the first place.

We have just gone halves in an IP and it would be better for our ability to save for deposits if we halved the loan on the PPOR. We like to keep all finances halved in the event that something happens it is a lot easier to work out.

My plan was to split the original price of the property in two (my half that is half paid off, and her half which would be half of the full price).

I understand that we would still be liable in a borrowing sense for the full amount but by splitting the loan we would be able to pay down our non depreciable loan quicker.

What would be the reasons not to go down this path?

If you own the property then it would be a bit hard to split the loan - when there is none. Sounds like you want to sell half the house to your spouse - seek advice on the stamp duty issues.

The problem with this is liability. Each of you would go on the loan and each liable for the whole debt. This will hurt you moving forward in terms of borrowing - but if you only want to get one or 2 more properties it may not be an issue.

Think also in terms of asset protection. If either of you go bankrupt.

estate planning - especially if either of you have former spoouses.

etc

 

[thetom]

If you own the property then it would be a bit hard to split the loan - when there is none. Sounds like you want to sell half the house to your spouse - seek advice on the stamp duty issues.

The problem with this is liability. Each of you would go on the loan and each liable for the whole debt. This will hurt you moving forward in terms of borrowing - but if you only want to get one or 2 more properties it may not be an issue.

Think also in terms of asset protection. If either of you go bankrupt.

estate planning - especially if either of you have former spoouses.

etc

Yeah sorry i meant sell half the property. The plan is to smash out the loan ASAP so if there is two people paying the loan down it should only take 3 years if interest rates only rise a little.

There are no previous spouses.

Our plan is for a few properties in the near future but once we hit our thirties and have a PPOR paid off go for it. Hoping by then we have learnt a lot more.

 

[alexlee]

Yeah sorry i meant sell half the property. The plan is to smash out the loan ASAP so if there is two people paying the loan down it should only take 3 years if interest rates only rise a little.

If your relationship is serious enough to give your partner half the debt, why not just pool your finances or combine savings to pay off the loan without changing the name on the loan?

If you're so fixated on paying off the loan, how are you going to bring yourself to take on more debt for investing after you'd paid the PPOR loan off?

 

[thetom]

If your relationship is serious enough to give your partner half the debt, why not just pool your finances or combine savings to pay off the loan without changing the name on the loan?

If you're so fixated on paying off the loan, how are you going to bring yourself to take on more debt for investing after you'd paid the PPOR loan off?

There is just the fact that i have already paid off $150000 of the loan.

There is only a rush to pay off the non deducible debt. Once it is gone it will be easier to save deposits and increase our serviceability.

 

[wylie]

If you are concerned about what happens if the relationship falters, then why not just see a lawyer and have a pre-nup drawn up covering what you are bringing to the union.

It might not be enough to save your $150K already paid off the loan, but if things turn sour, do you reckon things will go smoothly anyway?

 

[Terry_w]

seek legal advice on death and divorce. If your spouse could end up with a property settlement anyway then transferring now results in a lot of fuss but little benefit.

Death may be different. If she dies first and leaves her share to her sister for example, this may not be want you wanted. Keeping it in your name means you would have more control. - But from her pov she would worry that you could leave it to someone else too. This can be rectified by having her lodge a caveat to notify her equitable interest.

 

[thetom]

If you are concerned about what happens if the relationship falters, then why not just see a lawyer and have a pre-nup drawn up covering what you are bringing to the union.

It might not be enough to save your $150K already paid off the loan, but if things turn sour, do you reckon things will go smoothly anyway?

Not overly concerned, she is very straight up and not the type to go for it. The main point being that we like to know what each other has. I guess in a real life monopoly game however we are teaming up to conquer the property world.

The real reason was to help pay off the loan and not have our finances mixed. Although we have been together for over 5 years we still like to keep finances separate.

 

[thetom]

seek legal advice on death and divorce. If your spouse could end up with a property settlement anyway then transferring now results in a lot of fuss but little benefit.

Death may be different. If she dies first and leaves her share to her sister for example, this may not be want you wanted. Keeping it in your name means you would have more control. - But from her pov she would worry that you could leave it to someone else too. This can be rectified by having her lodge a caveat to notify her equitable interest.

A Will would sort out the case of death shouldn't it? We are both young and as such haven't thought about that kind of thing, although we should have.

 

[alexlee]

Not overly concerned, she is very straight up and not the type to go for it. The main point being that we like to know what each other has.The real reason was to help pay off the loan and not have our finances mixed. Although we have been together for over 5 years we still like to keep finances separate.

I still don't understand what you're trying to do. Are you saying that because you've brought more assets than her into the relationship, you also want her to contribute more from now on? If so, just set a budget and get her to pay $x into the loan every month or something. You don't have to change the names on the loan.

For example, some couples have a joint account for joint expenses as well as their own separate accounts.

 

[alexlee]

A Will would sort out the case of death shouldn't it? We are both young and as such haven't thought about that kind of thing, although we should have.

Well, yes, but you have to agree on what to put into the will. Also remember you probably have life insurance attached to your jobs, so if you die the assets might be significant.

As Terry said, what if she has, say, family she wants to take care of, and just puts 'everything I own goes to my parents'? If she owns half the property then that half goes to her parents as well. Which might not be her intention at all.

 

[thetom]

I still don't understand what you're trying to do. Are you saying that because you've brought more assets than her into the relationship, you also want her to contribute more from now on? If so, just set a budget and get her to pay $x into the loan every month or something. You don't have to change the names on the loan.

For example, some couples have a joint account for joint expenses as well as their own separate accounts.

I thought that because everything only has my name on it, it would be better to have both names if she was contributing.

We have just set up the joint account for food and joint expenses while keeping separate accounts.

 

[thetom]

Well, yes, but you have to agree on what to put into the will. Also remember you probably have life insurance attached to your jobs, so if you die the assets might be significant.

As Terry said, what if she has, say, family she wants to take care of, and just puts 'everything I own goes to my parents'? If she owns half the property then that half goes to her parents as well. Which might not be her intention at all.

When we bought the IP together we looked at our life insurance. We both have adequate insurance to pay out the loans and both have the other as the receiver of the payout.

In the case of a Will we would both have each other as receivers of everything.